Entrepreneurship, Frictions, and Wealth
By M. Cagetti, Mariacristina De Nardi. Journal of Political Economy, 2006
319 citations recorded by the source corpus.
This paper constructs and calibrates a parsimonious model of occupational choice that allows for entrepreneurial entry, exit, and investment decisions in the presence of borrowing constraints. The model fits very well a number of empirical observations, including the observed wealth distribution for entrepreneurs and workers. At the aggregate level, more restrictive borrowing constraints generate less wealth concentration and reduce average firm size, aggregate capital, and the fraction of entrepreneurs. Voluntary bequests allow some high‐ability workers to establish or enlarge an entrepreneurial activity. With accidental bequests only, there would be fewer very large firms and less aggregate capital and wealth concentration.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/8d289a94b29b73f53092e012d7e0a2b0ddddd3c4
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In Economics and Econometrics
Citations in the corpus
- The Role of Risk Aversion in Predicting Individual Behaviours (2004, unknown): “si = a0wi + a1yi + a2zi + a3i3⁄4i + ui (9)”
- WEALTH INEQUALITY: DATA AND MODELS (2005, unknown): “A large difference in wealth holdings is also between entrepreneurs and nonentrepreneurs, as shown in Table 3 (taken from Cagetti and De Nardi [16]).”
- Aggregate Consequences of Limited Contract Enforceability (2004, unknown): “See Cagetti and De Nardi [5] and Quadrini [23].”
- Skewed Wealth Distributions: Theory and Empirics (2018, unknown): “constraints, Carroll, Slajek and Tokuo (2014b) note that “.”
- Uninsured Idiosyncratic Investment Risk (2005, unknown): “For example, let χ = 20% and α = 36% (approximately US data) and calibrate ξ so that hand-to-mouth workers account for 50% of aggregate consumption, which is the fraction estimated by Campbell and Mankiw (1989). Then, the threshold for the EIS raises from θ = 0.2 to θ = 0.4.11 Some information about”
- Optimal Development Policies With Financial Frictions (2014, unknown): “…the recently burgeoning macro-finance literature (e.g. Kiyotaki and Moore 1997; see Brunnermeier, Eisenbach, and Sannikov 2013 for a comprehensive survey) and the literature on entrepreneurship and wealth distribution (Cagetti and De Nardi, 2006; Bassetto, Cagetti, and Nardi, 2013; Quadrini, 2011).”
- Artificial Intelligence and Entrepreneurship: Implications for Venture Creation in the Fourth Industrial Revolution (2020, background): “…rewards have been analyzed by a number of scholars who have identified different constituent parts of rewards including financial rewards ( Cagetti & De Nardi, 2006 ), nonpecuniary benefits (Blanchflower, 2004 ), satisfaction (Binder & Coad, 2016), earnings ( Åstebro & Chen, 2014 ), and…”
- Estate Taxation, Entrepreneurship, and Wealth (2009, unknown): “In previous work (Cagetti and De Nardi [11]) we have discussed the relevant empirical counterpart to the entrepreneur in our model.”
- Growing Like China (2011, unknown): “Theories of entrepreneurial savings with financial constraints such as Quadrini ( 1999 ) and Marco Cagetti and Mariacristina De Nardi ( 2006 ) could add new insights to reinforce and complement the mechanism of our theory.”